In news that shouldn’t surprise anyone, the U.S. dollar is on its way out as the world’s reserve currency.
And yet while America’s deteriorating fiscal position in the world has prompted the International Monetary Fund (IMF) to recommend creating a new global currency, President Barack Obama wants to pump $108 billion of money we obviously don’t have into the IMF.
From Bloomberg:
As much as 70 percent of the world’s currency reserves are held in dollars, according to the IMF, leading to calls for nations to diversify their cashpiles to avoid excessive exposure to the U.S. economy as it quadruples its budget deficit in a bid to counter the worst recession since the Great Depression.
The dollar fell on June 3 to its lowest level in 2009 against the euro on concern that the ballooning deficit would sap demand for Treasuries among foreign investors and central banks.
“The largest debtor is very unlikely to dominate any currency arrangement today,” said Ousmene Mandeng, head of Ashmore Investment Management Ltd.’s public sector investment advisory.
Indeed, nations are already starting to reduce their dependence on the American dollar, as Brazil, China, India and Russia are all purchasing bonds tied to the IMF’s Special Drawing Rights (which the IMF hopes will serve as the basis for a new global currency).
Special Drawing Rights are the “unit of account” for the IMF, and represent claims that nations can make on a basket of different currencies used by IMF members.
China and Russia have already recommended ditching the dollar in favor of SDRs.
By Seth June 9, 2009 at 12:46 pm
“Special Drawing Rights are the “unit of account” for the IMF, and represent claims that nations can make on a basket of different currencies used by IMF members.” — I’m not a banker, what does this mean for me? Who’s face in on an IMF dollar?
By fitsnews June 9, 2009 at 12:47 pm
Seth-
Not Obama’s.
-FITS
By Liberty for me June 9, 2009 at 3:35 pm
It means your money is becoming more worthless by the day…Store your wealth in hard assets.Buy gold or pay your house off if you can.Anything that would have value if your dollars dont.A paid off vehicle is a good start.
By James the Foot Soldier June 9, 2009 at 5:18 pm
How do the schmos pay off an Escalade with an 84 month term?
By Ed June 9, 2009 at 9:49 pm
Isn’t it almost comical how most people have no comprehension of the value of sound money?
Wouldn’t it be great if our coins were actually made out of precious metal- instead of junk metal?
The Romans gradually took the precious metal out of their coins- right before they went down the tubes.
Some things never change.
By damn the torpedoes June 10, 2009 at 9:29 am
Maybe if those books they made us read about history in school actually had something about how other nations fucked up in the past and didn’t spew anti american propaganda all the time then we might have some understanding of how bad we have actually fucked ourselves the past decade with elections, money, and a general sense of entitlement no matter how much destruction it brings.
By Morrrison Bonpasse June 11, 2009 at 3:41 pm
Yes, the U.S. dollar is declining and the question must be: what will replace it? That new global currency should be a common currency managed by a monetary union central bank. When such a currency supports countries with 40-50% of the world’s GDP, that currency will become the defacto Single Global Currency, and the “tipping point” momentum will favor its continued growth, until it supports all the countries of the world. Thus will come the Single Global Currency managed by a Global Central Bank within a Global Monetary Union, and the benefits can be measured in the trillions, annually.
Such a Single Global Currency will provide what the people of the world
want – stable money.
The primary problem for the euro and every regional monetary union
today is that they must still exist in the multicurrency world where
the value of its currency will fluctuate against other currencies.
If 16 countries can use the same currency, why not the 192 U.N.
members? Those 192 countries now use 141 currencies and the number is
dropping annually. The euro is definitely a harbinger of the future, and
soon all 25 EU members will be part of the EMU, and by then, there
will be more EU members to add. Several of the remaining non-euro EU
members are now seeking admission as soon as possible. The IMF has even
urged several EU members to “euroize” even before completing the standard
accession process.
In addition to eliminating currency fluctuations, the use of a Single
Global Currency would eliminate the current foreign exchange trading
expense of $400 billion annually, eliminate currency risk, eliminate
current account imbalances, eliminate the need for foreign exchange
reserves (now totaling more than $6 trillion); and bring other benefits
worth trillions, such as reducing the impact of global financial turmoil
such as we are now experiencing.
The Single Global Currency Assn. (www.singleglobalcurrency.org)
promotes the implementation of a Single Global Currency by 2024, the 80th
anniversary of the 1944 conference. That’s only 15 years away.
The world is moving toward a Single Global Currency through the
creation, expansion and merger of regional monetary unions. Other
routes are through “ization” (as in “dollarization”and
“euroization”) and international monetary conferences proposals and
agreements, such as were seen at Bretton Woods. The merger of the
eurozone with one or two other currencies is one possible route to a
Single Global Currency.
The challenge now is to reach that goal deliberately, as soon as
possible, with as little cost and as few crises as possible. If the
eurozone were to merge with the U.S. dollar of the yen, or if the yen
and the U.S. dollar were to form a monetary union, the road to a Single
Global Currency would be clear.
The only remaining questions about implementation of a Single Global
Currency are: when? and how much cost and turmoil will the world
endure before that implementation.
See the book, “The Single Global Currency – Common Cents for the World.”
Morrison Bonpasse
Single Global Currency Assn.
Newcastle, Maine, United States